Case Study: Removing Capital Gains Tax from a Portfolio

Our client was a group of Trustees overseeing a collectives portfolio, which had grown from £150,000 to almost £200,000. Over the coming year, they needed to be able to withdraw £45,000 to distribute to beneficiaries.

Capital Gains Tax Concerns

The client was considering withdrawing this amount across all of the funds in the portfolio but were made aware that the Trust could incur a capital gains tax (CGT) bill of a few thousand pounds, if they went ahead. A Trust has a CGT allowance (the amount of gain that can be made before tax is due) of half that of an individual. Tax is due on gains in excess of the allowance at a rate of 20%.

Our Solution

Our financial planning team helped this client by:

  • Selling selected funds to raise half the amount required this tax year, using the Trust’s CGT allowance.
  • Selling selected funds to raise the balance required in the new tax year, using the Trust’s annual CGT tax allowance, thereby reducing or eliminating their CGT liability.
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